Dendreon: The Risks Today

In the following video, Fool analysts David Williamson and Austin Smith discuss the risks facing Dendreon .

This small biotech was one of the most exciting stories for 2012 and may be again for 2013, but it's not without its risks, Austin says.

David sees three key areas of risk for Dendreon. The first is financial. Dendreon may be burning less cash than it had been, but it still said goodbye to nearly $100 million through the fist half of 2012. That's on top of $400 million in 2010 and nearly $300 million in 2011.

Sales of its drug Provenge will need to ramp up quickly for the company to make good on a $620 million debt payment coming up in 2016.

There is also a competitive threat. Provenge doesn't have the prostate cancer space all to itself, and it will go head-to-head with a a cheaper drug produced by Johnson & Johnson .

The last area of risk is business. Dendreon has had a hard time convincing doctors that its $93,000 treatment is worth the upfront cost and burden on cash flow at their offices, David says. Because of this and questions of its efficacy, Dendreon could struggle to ramp up sales.

Although risks remain, Dendreon's run over the past four years has seen sub-$5 share prices skyrocket to 10-bagger status before tumbling all the way back down below $5, as its revolutionary prostate cancer vaccine, Provenge, became a lightning rod for debate. But where does that leave investors -- other than a bit nauseous from the roller-coaster ride? Our own David Williamson answers this question, and many more, inside our brand-new premium research report on Dendreon. Inside, he details every key issue facing the company and outlines just how Dendreon intends to regain its former glory. The report also comes with a full year of analyst updates, so claim your copy of this exclusive report today by clicking here now.